Market Sentiment: Bullish
- AUD/USD forms a classic inside bar trade setup
- A bullish breakout may target 0.9461
- Australia’s housing sector shows a surprised slowdown during first quarter
AUD/USD consolidated around the 0.9350 handle yesterday due to lack of direction. The pair is expected to hold the current range ahead of the US inflation figure which is due later this week. The sentiment remains bullish due to Higher High and Higher Low in the previous wave.
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As of this writing, the pair is being traded near 0.9355. A support may be seen around 0.9331, the 50% fib level ahead of the channel support which is currently sitting in near 0.9283; a break and daily closing below the channel support will push the pair into negative territory, validating a dip below the 0.9200 support area.
On the upside, the pair is likely to face a hurdle near 0.8385, the intraday high of yesterday and then 0.9394 that is the high of last week. The pair has formed a classic inside bar pattern, a breakout should provide clear direction to the pair, the Thursday bar is acting as the mother bar in this trade setup.
Australia House Price Index
The Australian Bureau of Statistics (ABS) released the house price index on Tuesday. The average price of a house in Australia rose by just 1.7% during the first quarter as compared to 3.8% increase in the quarter before, missing the median projection of 2.9% increase. Generally speaking, higher house prices are considered positive for the economy because it shows higher purchasing power.
In the short term, inside bar breakout setup offers a great trade opportunity in the Aussie Dollar. Buy Stop and Sell Stop orders may be placed at the swing high and low of the Thursday bar with a tight stop loss and take profit limits.
Prepared by Usman Ahmed, Capital Trust Markets
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